It’s a man’s world in Wall Street…or at least, it used to be.
Women investors are rising up and giving their male counterparts a run for their money these days. (No pun intended.) Although women were previously known for holding off on investing and doing so in low-risk situations, lately and increasingly, women investors rule. How is this?
Kiplinger’s Personal Finance magazine’s April 2016 issue cover story goes into depth of the reasons ladies are killing it in the finance world.
To begin, women’s approach to investing is different than men. They’re better at matching their goals, they research to a greater extent, think long-term, and they stay composed during a downturn in the market. In fact, women seem less likely to behave erratically with their money, especially under pressure; that is, they change their asset allocation less as well as limit their trading.
While men can be excellent investors as well, as proven throughout the years, the magazine adds that the different approach women take has demonstrated much success and value. For instance, Kiplinger’s Kathy Kristof mentioned that an evaluation of 60,000 users on Openfolio.com, a social media site for the world of personal investors, showed that women lost less in 2015 when the market was down and gained more per point in 2014 when the market was exceptional.
In addition, the publication teamed up with InvestmentNews to survey 1,500 readers (53% men and 47% women) via e-mail to learn more about investing habits. The results can be found here.
As part of the article, Kiplinger’s also asked a group of successful women investors, including some from Wall Street, to provide their own investing advice. Regardless of your gender, everyone can benefit from these tips:
- Know your investment. Choosing to buy into companies who make products and services you actually use and love (or could use personally) is a great starting point in finding attractive stock. Pick items that sell quickly and show much potential. To find some of these, though, will call for doing some research and thinking of yourself as the consumer. Don’t over-complicate things; start with what you know.
- Keep calm and invest on. It’s important to take risks when investing, but it’s equally important to know your chances. Men are more likely to invest 100% of their assets in stocks, which can lead to wider gains; however, this is only true as long as they don’t strike out causing them to lose substantial value. Finding balance between risk and loss is one of the keys in funding success. As you look into organizations to invest in, find strong businesses with clear competitive advantages that are able to pay an abundant dividend or premium.
- Plan ahead. Instead of worrying about competing with others in the market, keep your eye on the overall prize. Create and focus on your own individual goals and plan. It’s a myth that women are not concerned about a substantial return; they just are not allowing competition to stray them from their own efforts, which is attributed to their successes and rise in this field over the last few years. Having and maintaining goals in investing helps to prevent other noise from getting in to your head, and thus, preventing interference on decisions such as trading too early or too much.
- Trade less. Men tend to trade more than women, which, some in the industry argue, is due to overconfidence and “jumping the gun,” if you will. Women also monitor their numbers less, which may also be a factor in this find. The problem with trading frequently is that it hurts investment returns over time.
These are just a few basic tips that can help you reach a higher gain. Even though the approach of women in this field produces notable results, female investors could also benefit from the strengths of their male counterparts. Together, men and women can make a great financial squad and should contemplate teaming up together in future decisions.